PayCast Provides Turnkey Interbank Transfers and Email Payments

PayCast is a Dallas-based technology spinout from online trading
company TradeCast that was acquired by AmeriTrade in April
2001. The technology used by PayCast has been in development since 1999, but
the company itself was founded in 2001 and has just 9 employees. Investors
include TradeCast founders and Buena Venture Associates, an early
stage venture company that also backed TradeScape and InsureZone
among others.

PayCast is targeting the 5.7 billion checks and wires initiated by
consumers each year. Using a single interface, users are able to send funds
to others or redistribute funds among their own accounts. Unlike PayPal,
PayCast never takes control of client funds; it acts as a switch,
authenticating and initiating the movement of funds and then notifying both
parties via email.

The company plans to deliver services exclusively through financial
institutions. It currently has two signed financial institutions contracts
in the early stages of deployment. PayCast is also working on an employee
test at a very large bank.

Funds can be moved two ways:

1. Via ACH electronic transfer which typically takes two to three
days.

2. Via ATM network: banks using participating ATM networks will
have the option of enabling real time transfers between accounts hooked to
the network; given typical interchange rates, this option will be
substantially costlier.

Management

The CEO and president are both from Texas Capital’s ($1.3 billion;
Dallas, TX) BankDirect unit.

Name

Title

Resume

Todd Harbison

CEO

Co-founder of BankDirect, which built a
customer base of 40,000 with $400 million in assets within 18
months.

Timothy Warner

Pres.

18 years of experience in the
information technology industry; worked at BankDirect.

Manmeet Singh

CTO

Previously CTO of Tradecast

Products

The company currently has three products:

Interbank funds transfer (me2me):Users may
transfer money between any of their accounts at any U.S. financial
institution.

Email payments (P2P): Users can send money to anyone in
the U.S. The recipient directs the funds into the appropriate bank account
upon receiving email notification of the transaction. The sender never sees
the recipient’s bank account numbers.

Telephone transfer: Users establish and maintain payees
on the Web but are able to initiate transfers using a telephone call.

Features

P2P payments and account-to-account transfers are delivered
through a single interface .

When away from their computer, users can initiate transactions
via phone.

Users have the option of adding a secret word to
transactions for additional security.

Like FedEx, senders designate who pays the transaction fee
(sender or recipient).

Transaction confirmations can be sent via email, pager, or
both.

Users establish their own daily transaction limits.

*Assuming the bank’s ATM network supports account-to-account transfers
and the recipient’s account is a member of the same network

Financial Institution Costs

Costs vary significantly depending on the size and complexity of the
implementation, but smaller banks and credit unions could expect to spend in
the low five-figures to contract with PayCast plus per-transaction fees
dependent on volume and transaction type. Real-time transactions via ATM
switch are considerably more costly than 2-3 day ACH entries.

How it Works

PayCast’s “version 1” interface is simple to use, a prerequisite to a
successful epayments service (screenshot below). We look forward to version
2 and continued innovation.

Address book of payees.

Payments to non-cardmembers must be password-protected and sent via
standard delivery.

Confirmation screen prior to sending.

Setup options.

Account maintenance screen.

The system sends transaction confirmations
via email, pager, or both.

Users can select the maximum daily
transaction limit for their account.

PayCast coined a good name for its service, “personal money transfer.”